Chargeback Police ReportCan Local Authorities Help with Chargeback Fraud?

Chargeback Fraud is a Crime; Should I Report it to the Police?

I have good news and… less-than-good news.

The good news is that you have the right to contest a customer’s invalid chargeback against your company. The less-than-good news is that contesting doesn’t necessarily mean you’ll win a reversal from the issuing bank.

In fact, if you’ve ever tried to challenge a chargeback — even one you’re sure is fraudulent — you know that the cards are all stacked in the customer’s favor. And if the issuer sides with their customer, you’re out of luck. 

But, did you know that you can report chargeback scams to the police, in some cases?

As with any other type of fraud, deliberately filling an illegitimate chargeback is illegal. Reporting the crime may seem pointless, but in some cases, it might help you get your money back. In this post, we’ll examine how that works, why reporting is important, and ways it can benefit you in the long run.

Can I File a Police Report in Response to Chargeback Fraud?

The short answer is “yes.” 

Chargebacks are absolutely legal; in fact, the chargeback system is actually required by the law as a consumer protection mechanism. But, that’s only if the cardholder has a valid cause for filing a chargeback.

Cardholders have learned how to leverage loopholes in the chargeback process to gain unwarranted refunds (an act known as “chargeback fraud”). This activity is technically a form of wire fraud, meaning that you can report it, just like any other crime.

Understand, however, that your local law enforcement may drag their feet a little. 

If you know who the perpetrator is, and that person is within the police’s jurisdiction, then they might be able to help you. Outside your immediate locality, though, it would require a lot of work to track down who scammed you. And, even then, there is little chance that charges could stick.

Understanding “Intent to Defraud”

“Intent to defraud” refers to evidence required to file a police report. The merchant must prove they were a victim, and that the fraudster had either deliberate intent to harm, or was careless about truth in their communications.

To file a fraud police report, you’ll need to provide details for the incident. When the fraud happened, how much you lost, and so on.

The most crucial thing you’ll need, however, is evidence that the fraud was intentional. In legal terms, this is called “intent to defraud.”

You have to show that there was a scheme to cause you harm, and that the other guy was doing it intentionally. In the case of chargeback fraud, this would mean evidence showing that the fraudster knowingly made a false statement. For example, they might claim that an order arrived damaged, or didn’t arrive at all.

You can use things like deliver receipts, communications with the buyer, financial records, even social media posts — basically, anything that supports your position. If you can’t provide that, then the authorities may not accept your report.

How to File a Police Report for Chargeback Fraud

If you feel you have evidence that shows intent to defraud, your next step is to figure out where to report it.

City police? Sheriff’s office? State troopers? You may have to do a little research to figure out jurisdiction.

After that, you’ll need to gather up all your documentation. This can include:

• Your driver's license or other identification
• Details about what happened
• A detailed list of purchases involved
• A list of names/addresses used for fraud
• The total amount of your losses, including merchandise
• Proof of intent
• Any other relevant info that will help with your report.

Take this and either call or report to law enforcement offices. Be prepared to answer additional questions. And, make sure to ask for a copy of the finished report.

A Federal Report Might Work Better

No matter how well-intentioned, reporting chargeback scams to your local police probably won’t help you much. As we said earlier, there’s just not much they can do unless the fraud is local. But believe it or not, that might actually work in your favor.

The huge surge in chargeback misuse in the last few years can be directly tied to one thing: the internet. As eCommerce has risen, fraudsters have discovered loopholes in the chargeback system that leave it vulnerable to cybercrime.

There’s a good chance that if whoever is attempting to defraud you is in this country, they’re probably in another state. And when electronic fraud (including internet fraud) crosses state lines, that means the federal government can get involved.

If...	It could be considered…	Maximum Penalties:
…merchandise is received through the mail	Mail Fraud	up to 30 years in prison/up to $1,000,000
…a person intentionally defrauds over the internet	Wire Fraud	up to 20 years in prison/up to $250,000
… the fraud involves multiple financial institutions (chargeback fraud qualifies)	Bank Fraud	up to 20 years in prison/up to $1,000,000

A federal investigation into your claim is likely to produce better results than a local chargeback police report could. But, don't start celebrating just yet.

Will Filing a Chargeback Police Report Do Any Good?

You probably shouldn’t expect a direct return, to be honest. In other words, you probably won’t get your money back, even if you file a police report.

First off, tracking down chargeback fraudsters involves a lot of work. And, there’s statistically a small chance of success for local police when hunting down fraudsters, for many reasons:

Even if the fraudster is found, there still has to be a conviction, and then a court order for repayment. And that would be hard to collect if the perpetrator is in prison. 

Federal agencies typically have more resources, and your report could help them track down a major crime ring. But again, it’s not likely to get you money back. 

The Best Defense Against Chargebacks

You might be able to take the cardholder to small claims court. Suing the fraudster may seem like a good idea, but your burden of proof will be substantial. And, if the bank didn’t see enough evidence for a reversal, there’s a good chance the judge won’t, either. 

Still, that’s another good reason for filing a police report: it’s one more piece of evidence to challenge a false claim.

At the end of the day, there are only two ways to definitively avoid chargeback fraud losses. One is to re-present every false claim. Keep in mind, however, that even if you win, you’ll still be liable for non-refundable chargeback fees.

The second option is more practical: do everything you can to prevent chargebacks from even happening.

There are a wide range of tools out there to help you achieve that goal. And Chargebacks911® has more experience-based knowledge of combatting chargebacks than any other provider. Our experts can help you implement an end-to-end management strategy to deflect invalid claims, retain revenue, and prevent future disputes. Contact us today to learn more.